---

S&P Raises Penda Corp Ratings to 'B'; Off Watch

9 June 1999

S&P Raises Penda Corp Ratings to 'B'; Off Watch

    NEW YORK--Standard & Poor's CreditWire--June 9, 1999--Standard & Poor's today raised its corporate credit and senior unsecured debt ratings for Penda Corp. to single-'B' from single-'B'-minus
    The ratings are removed from CreditWatch, where they were placed April 13, 1999.

The outlook is stable.
    The rating actions reflect Penda's improved operating performance and prospects for further revenue and earnings gains this year. Penda manufactures and distributes bedliners and other light-truck accessories. The company sells products to both OEM dealers and aftermarket distributors.
    Penda reported a significant improvement in operating earnings in 1998 compared with 1997. The company generated about $20 million in earnings before interest, taxes, depreciation, and amortization (EBITDA), compared with just $9 million in 1997. The improvement reflects Penda's success in offsetting its 1997 loss of business with Ford (Penda's largest customer at the time) with sales to other original equipment manufacturers and additional aftermarket business. It also reflects benefits from various streamlining initiatives implemented by a new management team that started running the company in mid-1997. These initiatives, along with an increased focus on higher margin products such as NASCAR brand products, are expected to result in further revenue and earnings gains this year.
    Despite the improvement in operating results, Penda's small revenue base (about $78 million in 1998) and leveraged capital structure (debt/EBITDA of about 3.8 times) leave it extremely vulnerable to the loss of other customers, a downturn in demand for bedliners, and/or increased pricing pressures.
    Current ratings reflect this vulnerability.

    OUTLOOK: STABLE
    Penda's emphasis on cost containment and new marketing initiatives should limit downside risk. Upside rating potential is limited by the company's limited scale of operations and competitive end markets, Standard & Poor's said.--CreditWire